Valeura Energy Inc.’s origins stem from two predecessor companies, PanWestern Energy Inc. (“PanWestern”) and Northern Hunter Energy Inc. (“Northern Hunter”) (private), which were combined by a Plan of Arrangement and renamed Valeura Energy Inc. in September 2010. The founders of Valeura had previously build and sold Verenex Energy Inc., which was active in Libya, and subsequently capitalised Northern Hunter as the platform for a new international company. The arrangement with PanWestern provided a TSXV listing, and in June 2011 the Company graduated to the TSX.
The Company immediately set out to become a global energy company focused on exceptional value creation, with a primary geographic concentration on Turkey, plus minor non-core interests in Canada which were inherited from the combination of PanWestern and Northern Hunter.
Through a series of commercial transactions spanning 2010 through 2014, Valeura entered into several farm-in agreements, acquisitions, and new licences, focused initially on the Anatolian Basin in southeast Turkey, and later on the Thrace Basin in north-west Turkey. The Company was strategically seeking production opportunities where it recognised upside potential via both development-focused operations and also exploration.
In April 2013, the Company was awarded the Banarli licence (100% Valeura) in the centre and deepest part of the Thrace Basin, which the Company believed had upside potential for a deep, tight gas play.
In 2013 and 2014, the Company relinquished various assets in the southeast Turkey which proved to have limited upside potential. In 2014, the Company also sold its small, non-core assets in Canada.
Over this period, the Company generated revenue from oil and gas sales reaching an annual peak of nearly $25 million in 2014.
With the sales of non-core assets in Turkey and Canada completed, the Company concentrated its focus on its business in the Thrace Basin.
Also during this period, regulatory and legislative changes in Turkey resulted in the conversion of various petroleum titles to a new form of exploration licences and production leases including the conversion of the Banarli licence into two new exploration licences in June 2015.
Valeura and its JV partners, including Thrace Basin Natural Gas Turkiye Corporation (“TBNG”), concentrated their operational efforts on conventional, shallow gas production from their lands in the Thrace Basin, including fracking and producing from shallow, normally-pressured tight gas sands in both vertical and horizontal wells at depths down to approximately 1,500 – 2,000 metres. Valeura made several shallow gas discoveries and drilled the Yayli-1 well, on the Banarli licences, which demonstrated gas flow from two small fracks in over-pressured sands at depths of 2,700 – 2,900 metres.
In 2016, Valeura executed various agreements with Statoil (later renamed “Equinor”) to jointly exploit deeper formations on Valeura’s acreage in the Thrace Basin. Under the terms of the agreements Equinor committed to an investment on the Banarli licences, including payment of back costs and carrying the cost of two deep wells plus completing a significant infill 3D seismic program to earn a 50% interest in the deep rights (the “Banarli Farm-in”). Equinor was granted the right to become operator of the deep rights after earning its interest.
Also in 2016, Valeura acquired its JV partner TBNG, and concurrently sold certain deeper rights in its west Thrace exploration licences and production leases to Statoil.
During this period, Valeura continued to generate revenue from its ongoing conventional gas production in the Thrace Basin, with annual revenues of C$16 million in 2016 and C$15 million in 2017. Decreased revenues were largely a function of globally depressed energy prices.
From May through July 2017, Valeura drilled Yamalik-1, the first well under the Banarli Farm-in, intended to explore the deeper formations of its Thrace Basin lands. The well was drilled to approximately 4,100 metres and encountered a 900-metre interval of highly over-pressured gas-bearing sands, confirming the attributes of a deep tight gas play. Test results gathered in November and December 2017 proved an aggregate 24-hour test rate of 2.9 MMcf/d of liquids-rich gas.
In February 2018, the Company announced results of an independent evaluation of the Company’s prospective resources in the tight gas play as prepared by DeGolyer and MacNaughton (“D&M”) which attributed 10.1 trillion cubic feet of estimated unrisked mean prospective resources of natural gas which includes 236 MMbbls of condensate, to Valeura’s working interest of the play, at that time.
In September 2018 the Company re-completed the Yamalik-1 well, connected it to Valeura’s gas gathering infrastructure, and put the well on long-term test.
From October 2018 through January 2019, the Company drilled the Inanli-1 appraisal well, the second well under the Banarli Farm-in, at a location approximately 6 km to the north-east of Yamalik-1. The well was drilled to 4,885 metres and encountered a 1,615 metre gross column of high net-to-gross sandstone, interpreted to contain over-pressured gas.
From February through April, 2019, the Company drilled the Devepinar-1 appraisal well, at a location approximately 20 kilometres to the west of the Yamalik-1 and Inanli-1 wells. Devepinar-1 was drilled to 4,796 metres, with clear indications of over-pressured gas throughout a 1,066 metre gross column in the Teslimkoy and Kesan Formations. Three intervals were stimulated in the well, and were production tested on a comingled basis, demonstrating dry gas flow to surface.
In February 2020, Valeura’s joint venture partner for the deep gas appraisal programme elected to discontinue participation in the play and their working interest reverted to the remaining partners. As a result, Valeura’s management estimates that its working interest share of unrisked recoverable natural gas prospective resource in the play has increased to 20.2 trillion cubic feet equivalent.
In August 2020 Valeura articulated a clear strategy to add value for shareholders.
The Company committed to maximise the value of its conventional gas production business, and its efforts have culminated in a decision to sell the asset, effective July 1, 2020 for headline cash consideration of US$15.5 million, with additional upside consideration via royalty payments in the amount of US$1.0 – US$2.5 million over a five -year period. The transaction closed in Q2 2021.
Valeura’s announced strategy is focused on pursuing mergers and acquisitions as a way to add production and cash flow in the near/mid-term. The management team believes market conditions are favourable to leverage its strong financial position and internationally savvy team toward inorganic opportunities in the regions where the team has a demonstrated track record of success.
The Company is continuing with appraisal of the deep, tight gas play, and has integrated all learnings to date from drilling and testing deep gas appraisal wells. This has yielded a forward programme targeting “sweet spots” in the play where the best quality reservoir occurs at depths which offer optimal fluid and flow characteristics, namely, the dry gas window. The Company intends to secure an additional partner to participate in the play, before committing substantial capital to the play.
In April 2022, Valeura announced that it had entered into agreements to acquire various shallow water assets, offshore Gulf of Thailand, effective January 1, 2022. The assets include a near-term production opportunity at the Wassana oil field (89% operated interest) and a near/medium-term development project at the Rossukon oil field (43% operated interest). The acquisition closed on June 15, 2022.
In December 2022, Valeura announced that it had entered into an agreement to acquire three additional shallow water assets, offshore Gulf of Thailand, effective August 31, 2022. The assets include a 100% interest in the Jasmine and Ban Yen oil fields, a 90% operated interest in the Nong Yao oil field, and a 70% operated interest in the Manora oil field. The acquisition is subject to customary closing conditions, and completion is anticipated in Q1 2023.
The Company believes the acquisition establishes a platform for re-investment of cash flows into additional growth opportunities and for further M&A in the region.